Banks hand loan lifeline to small business

Katina Curtis and Matt Coughlan
The big four banks will suspend small business loan repayments to limit the impact of COVID-19

Australia's big four banks will suspend small business loan repayments for six months to guard against the economic tsunami of the coronavirus pandemic.

And the Morrison government is putting the final touches on a big boost to its own stimulus measures, while the states look at what more they can do.

But it has pushed back the federal budget by five months to October, saying times are too uncertain now.

The banking sector's assistance package will apply to more than $100 billion of existing loans.

Australian Banking Association chief executive Anna Bligh said it could put $8 billion back into the pockets of small businesses.

"This package is designed to go hard and as fast as possible to small businesses," she told reporters in Sydney.

"That is where it is needed most today in order to avoid more people falling out of work and into mortgage distress."

The measures are not restricted to any sectors, with banks set to be flexible on eligibility criteria between small and medium companies.

Ms Bligh said banks could also look at measures to help people struggling with repaying home loans if the financial aspect of the virus crisis deepens.

The Morrison government's fresh round of stimulus measures comes on the back of announcing a $17.6 billion package last week.

It is expected to provide income support to workers and sole traders who lose hours and jobs due to the coronavirus crisis.

Prime Minister Scott Morrison said the next six months or so would be a difficult and different time for many.

"There will be Australians over the next six months who, through no fault of their own, will find themselves with less work, with less income, and in the worst case, without a job," he told reporters in Canberra.

"That is going to happen and that's going to happen to quite a number of people."

Westpac senior economist Justin Smirk has forecast the jobless rate rising to seven per cent by October - which amounts to an extra 240,000 Australians out of work.

While many have called for the stimulus package to include a permanent boost to the dole - freshly renamed the Jobseeker payment rather than Newstart - Treasurer Josh Frydenberg said the government's second package would not look at structural changes that can't be removed after the crisis is over.

"Our focus is on targeted measures using the existing tax and transfer system and making it as simple and as easy as possible for Australians to get that support," he told the ABC.

Mr Morrison and state leaders discussed other support measures on Friday, including what the states could do to ease the pressure for renters in residential and commercial properties.

"All Australians are going to be making sacrifices, obviously, in the months ahead and everyone does have that role to play and that will include landlords," Mr Morrison said.

In recognition of the trying times, the commonwealth has pushed its budget away from the traditional second Tuesday in May to October 6.

The states and territories will follow suit.

"Forecasting for budgets is difficult at the best of times, let alone when we're in the midst of a global pandemic," Mr Frydenberg told reporters.

"It's important that we are able to deliver a budget at a time where there is more certainty about the economic environment."

Shadow treasurer Jim Chalmers called for updated figures on the budget position and economic forecasts to be released sooner than October even if a full budget wasn't set out.

"It is critically important that the Australian people are kept updated about the current state of the economy and the budget," he told AAP.